China’s manufacturing activity contracted in April, official figures show, as global demand for goods slowed and Communist Party leaders warned that a post-Covid recovery in the world’s second-largest economy had not yet taken a solid footing.
The National Bureau of Statistics’ Purchasing Managers’ Index fell to 49.2 points from 51.9 in March, below analysts’ expectations of 51.4 in a Reuters poll.
ChinaThe country’s non-manufacturing purchasing managers’ index, which includes the services and construction sectors, was 56.4, down from 58.4 in March, but continues to show expansion since President Xi Jinping took over. ended the country’s zero-Covid policy in December.
A reading above 50 indicates expansion from the previous month, while a reading below 50 signifies contraction.
“This is a mixed PMI report and suggests that China’s post-Covid recovery has run out of steam somewhat and calls for continued policy support,” said Zhou Hao, chief economist at Guotai Junan International, a Hong Kong-based brokerage firm.
In a sign of China’s economic recovery from a year ago, state media reported forecasts that around 240 million passenger trips would be made during the five-day May Day holiday this week, or more than in 2019 before the pandemic.
But as consumer activity rebounds from a weak base, the rest of the economy faces deeper challenges, with the real estate sector was still limping after a government crackdown and export markets were fading as advanced economies weakened.
In March, China’s Purchasing Managers’ Index painted a similar picture, with manufacturing growth faltering despite a resumption of exportswhile other sectors recorded a rapid increase in activity, indicating an uneven recovery.
“Economic growth has exceeded expectations. . . and the Chinese economy is off to a good start,” the Communist Party’s political bureau said at a meeting on Friday. But the “endogenous driving force” of the economy was “still weak and demand insufficient”, state media Xinhua reported, according to the office.
Zhao Qinghe, senior statistician at the NBS, said in a statement on Sunday that the contraction in the manufacturing PMI was “due to factors such as insufficient market demand and the high base formed by the rapid recovery of the manufacturing industry in the first quarter”.
Production rose slightly, but the sub-indexes for new orders, raw materials inventories and manufacturing employment all declined.
Goldman Sachs said in a note that the performance of the non-manufacturing index was “still strong but below market expectations, suggesting continued recovery in the construction and services sectors but at a slower sequential pace.” .
Part of the construction recovery was driven by infrastructure, the BES said. Beijing has used infrastructure to spur growth after the real estate sector collapsed over the past two years.
The political bureau signaled increased support for the economic recovery and called for targeted “proactive fiscal policy” and “prudent monetary policy”.
“The incomes of urban and rural residents should be increased through multiple channels. . . and the consumption of services in sectors such as culture and tourism should be boosted,” Xinhua reported according to the political bureau.
Nomura predicted that China’s export industries would remain under pressure due to “the ongoing global technology recession, increased turmoil in global financial markets, and deteriorating U.S.-China trade relations.”
“The slowdown in exports is likely to continue to hamper the recovery in employment and manufacturing investment,” he said in a report ahead of the release of PMI data.
—————————————————-
Source link